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Rubio's Restaurants (RUBO), owner of the Rubio's Fresh Mexican Grill chain, has agreed to go private in a transaction worth about $91 million, or $8.70 per share. The private equity sponsor of the deal is Mill Road Capital LP.

Rubio's had been exploring a transaction since October when Levine Leichtman Capital Partners made an unsolicited $8-per-share offer.
A Great Concept in Fast Casual Dining

While on college spring break in Mexico, Ralph Rubio came across something that changed his life: the fish taco. He knew this could be the focus of a restaurant chain and in 1983, started Rubio's (RUBO). Since then the company, based in Carlsbad, Calif., has sold more than 50 million fish tacos.

Of course, the restaurant business is brutally competitive. Things are perhaps even tougher for Mexican restaurants in the California area, which was especially hard-hit by the recession. This means it is critical to have a differentiated concept -- and this is the case with Rubio's. First, the food is made from high-quality ingredients, using Baja-inspired recipes. Items include World Famous Fish Tacos, Grilled Gourmet Tacos and Baja Grill Burritos.

Next, Rubio's provides a casual and fun dining experience. Each location has lots of color and a feel of Baja, with tropical prints and palm-thatched patio umbrellas. But probably the key success factor for Rubio's is its value-pricing. Essentially, the company has benefited from the major trend towards fast casual dining.

Still Small

Along with its buyout, Rubio's announced its first-quarter results. Profits came to $367,000 and revenues were up 1% to $46.7 million. Although same-store sales fell 1.8%. Even with a good concept, Rubio's is still feeling the impact of the recession. Moreover, its small scale does make it difficult to stand out.

But such things may present an opportunity as investors look for value. In fact, it does look like the restaurant sector is experiencing a pick-up in deal-making. For example, CKE Restaurants (CKR) recently accepted a buyout for $619 million. There is also Green Mountain Coffee Roasters' (GMCR) $290 million purchase of Diedrich Coffee (DDRX).

Considering this renewed enthusiasm, might there be a higher offer for Rubio's? Probably not. After all, the firm has vetted the deal for the past six months and the valuation seems fairly reasonable in light of the competitive environment and slow economy.